Pleasanton: Court rejects citizen group’s appeal in lawsuit over proposed Costco store

A state appellate court panel has denied a citizen group’s challenge of the public approval process for the proposed Costco store and overarching Johnson Drive Economic Development Zone, siding with the city over the adequacy of the environmental review completed for the project.

Pleasanton Citizens for Responsible Growth, a coalition spearheaded by former city councilman Matt Sullivan, had appealed an Alameda County judge’s November 2020 decision to reject the group’s lawsuit over whether air quality and traffic impacts were appropriately analyzed as required by the California Environmental Quality Act (CEQA).

“We conclude that PCRG’s claims challenging the adequacy of the analysis and comment responses related to traffic impacts are moot in light of recent amendments to the CEQA Guidelines, and we reject its similar claims related to air quality impacts,” the three-justice panel wrote on Feb. 28.

The judgment would seemingly clear the path for the Costco Wholesale store with a gas station, two hotels and other projects, along with significant associated roadwork, to move forward in the JDEDZ area after nearly a decade in the public process that included an opposition ballot measure defeated easily at the polls, two lawsuits by PCRG, and years worth of city review and council hearings.

“The majority of our residents anxiously await a Pleasanton Costco for quality groceries, personal grooming products, glasses, photo printing, furniture and more,” Pleasanton Mayor Karla Brown told the Weekly on Thursday. “As mayor, I am interested in keeping our tax revenues in the city of Pleasanton, while replacing the existing mountain of gravel with a new Costco store.”

Still Sullivan, who served on the council from 2004 to 2012 and has been a vocal critic of many aspects of the project over recent years, signaled that the citizen group is not giving up its fight even after the appellate court loss.

“It’s unfortunate that the legislature keeps undermining CEQA at the behest of businesses, the tech industry and developers,” he told the Weekly on Friday morning. “As the appellate judge stated, he denied our appeal because of a recent change in that law. CEQA is one of the few tools the public has to protect not only the environment but to provide us a voice when our government representatives do not.”

“PCRG has not abandoned our objections to this project and we are examining all our options for further action,” Sullivan said.

Costco appeal opinion

Attempts to reach Costco representatives were unsuccessful as of Friday afternoon.

The retail giant took an active role in the litigation as a listed real party in interest in the PCRG lawsuit against the city government.

Costco owns the Johnson Drive property on which it plans to build, which would mark its third Tri-Valley store joining Livermore and Danville.

Work related to the Costco store was put on hold amid the pending litigation, but city attorney Dan Sodergren said grading did begin at the site of the two hotels proposed for the JDEDZ in recent months and city staff were finalizing roadwork plans while the appeal was pending.

Sodergren confirmed that Costco is still tracking to manage construction of the traffic improvements needed on Stoneridge and Johnson drives to accommodate their store, in line with the tax-sharing agreement with the city to pay for the roadwork. City staff is, in parallel, processing the design review application related to the Costco store itself.

“​​I’m both relieved and happy that we can now put the environmental challenges behind us and move forward with getting the Costco store built and opened for our residents,” City Councilmember Kathy Narum said to the Weekly on Thursday. The JDEDZ will be located in the city’s District 1 — to be assigned to Narum’s seat — once council districting takes effect.

“It continues to be very clear to me that a majority of our residents want to be able to shop at Costco in Pleasanton for a variety of reasons including saving time not having to drive to a location outside of Pleasanton, fewer miles driven per trip and having Pleasanton benefit from the sales tax on Costco purchases not to mention having a Costco gas station,” she added.

Eight years and counting

Under consideration since 2014, the JDEDZ is the local regulatory framework laying out how redevelopment could occur on 40 acres of prominent property just south of the I-680/I-580 interchange, including rezoning a 20-acre site left vacant when Clorox closed its research center there. That parcel now largely consists of post-demolition debris piles.

The regulatory concept, designed by city staff to spur commercial development on land seen as under-utilized on Johnson Drive and Commerce Circle, also features strict design guidelines that aim to help expedite city review of future projects in the marquee area.

The first of what was ultimately two environmental analysis and public review processes for the JDEDZ spanned from 2014 to 2017.

The endeavor paused in the latter part of 2016 amid a citizens’ initiative measure — which was spearheaded by Pleasanton Citizens for Planned Growth, a group led by Bill Wheeler, owner of Black Tie Transportation, whose headquarters would be a neighbor to the Costco store. Wheeler’s coalition was unaffiliated with Sullivan’s PCRG.

Ultimately, 63% of voters in November 2016 defeated Measure MM, which sought to limit building size in the JDEDZ to 50,000 square feet maximum — a ballot question that did not explicitly reference Costco but was seen by many residents as effectively a vote on whether to allow the retail giant onto the property.

Work on the JDEDZ policies restarted soon after the election, and the council approved the original regulatory package in December 2017. However, Sullivan’s group sued the city that same month, opting for litigation under CEQA after a potential referendum petition failed to get off the ground.

In addition to citing concerns about the environmental review, Sullivan has long criticized the funding structure for roadwork associated with the entire JDEDZ but that needs to be completed before the Costco store can open — which includes a tax-sharing agreement for the city to repay a portion of the costs that Costco is fronting. That money would later be recouped by the city via a JDEDZ transportation fee charged to other future developers to build within that area.

The formal membership of Sullivan’s organization has remained unclear, but in its initial lawsuit, PCRG was identified as an “unincorporated association of residents, citizens, property owners, taxpayers and electors” from Pleasanton.

Months of initial litigation ensued before the council in September 2018 opted to rescind its original JDEDZ approvals in favor of additional environmental work in an effort to settle the first lawsuit with PCRG.

That decision put on hold Costco’s design review application and a Planning Commission-approved application from a hotel developer to build two hotels with 231 rooms in the JDEDZ area.

The follow-up round of environmental review started in October 2018 and lasted more than a year, a longer-than-anticipated process that included new studies by consultants focused on air quality, releasing the new documents for public comment and drafting responses to the comments before the final city hearings that culminated in the council approving the revised JDEDZ in February 2020.

During the next month, PCRG hit the city with a second lawsuit over the Costco store and JDEDZ, this time centering on the city’s final supplemental environmental impact report (RFSEIR).

At issue was whether Pleasanton city officials adequately considered the cumulative air quality and traffic impacts on the JDEDZ caused by three proposed or pending projects in neighboring Dublin (the IKEA store, Kaiser Permanente medical campus and the since-rescinded At Dublin development) as well as whether the city adequately responded to two public comments.

Alameda County Superior Court Judge Frank Roesch denied the group’s petition for writ of mandate in November 2020, ruling that “substantial evidence in the record” showed the city both adequately considered the three Dublin projects and appropriately responded to the public comments.

Before the appellate court

PCRG appealed Roesch’s ruling to the California Court of Appeal, First Appellate District, reasserting the same two challenges it argued before the trial court.

But the appellate court would side across the board with main arguments made by the city and Costco in denying the citizen group’s appeal and upholding the county judge’s decision, according to the 22-page unpublished opinion authored by Acting Presiding Justice James A. Richman and joined by Associate Justice Therese M. Stewart and Mendocino County Superior Court Judge Cindee Mayfield on special assignment.

With regard to PCRG’s arguments on traffic, which centered on level of service (LOS) impacts from the three Dublin projects, the appellate court cited CEQA guidelines that took effect in July 2020 which state “except for roadway capacity projects, ‘a project’s effect on automobile delay shall not constitute a significant environmental impact’.”

“Because LOS-based traffic analysis is no longer a consideration to determine if a project’s impact is significant, the city would be under no obligation to conduct a LOS-based analysis on remand,” the justices stated in determining the new guidelines rendered PCRG’s argument moot.

As for whether the city provided good faith responses to two public comments about air quality impacts, the court concurred with the city and Costco that PCRG’s arguments were “‘vaguely’ asserted and ‘inscrutable’.”

“In short, we see nothing inadequate in the responses provided by the city,” the court stated.

The court added, “Assuming PCRG is advancing distinct arguments related to air quality impacts, its failure to develop them with any cogent argument forfeits them on appeal, and we would be justified in disregarding them … In any event, to the extent we follow PCRG’s arguments, we would reject them.”

The appellate opinion authorized the city and Costco to recover their costs on appeal, but Sodergren confirmed that only applies to “minor miscellaneous expenses such as court filing fees” and does not include attorneys fees.

What comes next

Costco has advanced on design review with the city for its proposed on-site improvements related to its planned warehouse store and gas station, according to Sodergren.

“This will be followed by submission of on-site and building plan for review and eventual permitting,” Sodergren told the Weekly.

Meanwhile, the city issued grading permits for the site of the two proposed hotels in the JDEDZ in September, “and that work has recently commenced onsite,” according to Sodergren. Building permits were issued for both hotels in December, and construction is expected to get underway later this year.

The hotels would be able to open as soon as they’re completed, but the Costco store could not begin operations until the JDEDZ traffic mitigation improvements are finished. “It is expected Costco will coordinate their on-site and building permitting and construction with the JDEDZ Traffic Mitigation Improvements schedule,” Sodergren said.

Included among the road projects are upgrades to the I-680/Stoneridge Drive interchange, changes to the intersection of Stoneridge and Johnson drives, and expansion of Johnson Drive.

All plans for the roadwork are nearly complete, as city staff coordinated those efforts while the appeal process played out, according to Sodergren. “Right-of-way acquisition is in process. Caltrans and other permitting is complete,” he said.

Costco will be overseeing the construction contract for the roadwork in line with standards under a pending traffic improvement agreement between the company and the city, Sodergren said.

“A public bidding process will occur soon to select a general contractor to perform the work for Costco,” he added. “Throughout construction, the work will be inspected by city public works inspection staff and Caltrans staff to ensure compliance with the approved improvement plans. When complete, the improvements will be accepted by the city and Caltrans for operation and maintenance.”

Crews are expected to start construction on the traffic improvements this June, with the goal of wrapping up by fall 2023, according to Sodergren.